The Role Of Erm In Predicting Financial Failure Using The Sherrod Model

Abstract

This study aims to identify the role of ERM in predicting the financial failure, and provides solutions for ERM department to facilitate their prediction of financial failure of banks, by presenting the most widely used models at the international level, which enhances enterprise risk management, where we selected 5 Algerian banks ( Algerian popular credit bank, Algerian foreign bank, BNP Paribas Algeria, C.N.E.P bank and Fransabank Algeria) approved by the central bank of Algeria, and using the Sherrod model to calculate the Z values during the period 2020 -2022. In order to explain the study well, we used the deductive approach in the theoretical aspect in order to analyze the various concepts. We also used the inductive approach in the case study in order to analyze the results reached. The main findings of study are Sherrod’s model contributes to facilitating the ERM’s department task in predicting the risks of financial failure, as it provides classifications of the financial position of banks, which gives those in charge the ability to predict financial failure.